States that ban Medicaid-compliant annuities

No, there are not any states that ban Medicaid-Compliant Annuities.

“Medicaid-compliant” means that the Medicaid agency allows this type of annuity and that it does not jeopardize the eligibility of a Medicaid applicant / beneficiary. Furthermore, the amount of the annuity is not limited by any of the states.

Also called Medicaid Annuities or Medicaid Friendly Annuities, this type of annuity provides a way for Medicaid applicants to reduce their countable assets by converting them into a stream of income. When one has assets over the limit, they must be “spent down” in order for an applicant to become asset-eligible and meet Medicaid’s asset limit. Purchasing an annuity is one way to do so without violating Medicaid’s Look-Back Period.

For an annuity to be Medicaid-compliant, there are specific rules that must be met. For instance, the annuity must be irrevocable (the terms of the annuity cannot be cancelled and the lump sum of money returned) and immediate (the payments start right away). See additional rules here. Note that the rules surrounding Medicaid-Compliant Annuities vary based on the state in which one resides. One must exercise caution when purchasing a Medicaid-Compliant Annuity, as violating the rules in one’s state can result in Medicaid denial.

Another consideration, for single long-term care Medicaid applicants, is that the income from a Medicaid Friendly Annuity is counted towards Medicaid’s income limit. If the extra income puts the individual over the limit, they can be denied Medicaid eligibility. Medicaid-Compliant Annuities are often best suited for married couples in which one spouse is applying for Nursing Home Medicaid or a HCBS (home and community based services) Medicaid Waiver. In this case, a non-applicant spouse can receive the annuity payments and the income will not be counted towards the Medicaid applicant’s income limit.

When considering a Medicaid-Compliant Annuity, it is best to seek the counsel of a Medicaid Planner. Not only are these professionals very knowledgeable when it comes to state-specific rules, but they can also take one’s specific circumstance into consideration and determine if an annuity is the best option. Find a Medicaid Expert.